Save money for a rainy day

September 20-26, 2025

The main news. The rise in mortgage refinancing in the United States continues:

And not only refinancing, as hinted at by the sharp jump in sales of new buildings to a peak in 3.5 years:

Most likely, this is the reaction of households to the extremely unstable situation in the markets. People expect a sharp rise in prices and want to either “park” the money to protect it from depreciation, or purchase real estate, which, in their opinion, will soon become completely inaccessible.

Historically, this means a complete lack of optimism and the expectation of new problems in the economy and personal income. It is already difficult to give good advice to the FRS leadership. However, we’ve written about this so many times that our readers may have gotten a little tired of it.

Macroeconomics. The balance of industrial orders in Britain is negative for 38 months in a row:

The last time a longer period of negative balance was more than 20 years ago:

The PMI (expert index of the state of the industry; its value below 50 means stagnation and decline) of the French industry (48.1) is the weakest in 7 months:

Japan’s PMI (48.3) is in the lowest level at 1.5 years:

German Business Climate Index (IFO Survey) worst in 4 months:

And its component of the current estimate is worst for 7 months; it is approaching the 32-year bottom in the end of 2024 (so far excluding covid):

The index of national activity in the USA from the Federal Reserve Bank of Chicago remains negative for 5 months in a row:

The index of industry activity in the Federal Reserve Bank of Richmond region in the USA has deteriorated significantly:

And its key supply indicator dropped to -20, below which it remained stable as early as 2009; after that time, there were only single collapses in covid, at the end of 2018 and in the middle of 2024:

The US consumer sentiment index from the University of Michigan is hovering near record lows; it is characteristic that its current value is below the bottom of 2008:

Precious metals continue to break records – platinum has now accelerated, updating its 12-year peak:

Silver is rushing to a record high in 2011 (in dollars, but it has already been broken in euros):

Finally, gold is updating records, and in euros they are much more impressive than in dollars: the price is already 2.3 times higher than the maximum of 2012 –

It is difficult to imagine a clearer inflationary signal.

By the way, even the price index for the total volume of industrial products indicates an increase in prices. Apparently, American companies have given up hope of competing with the Chinese and other mass producers and have simply started to raise prices.

The Central Bank of China has left monetary policy unchanged, despite signs of a cooling in the economy. The Swiss Central Bank kept the rate at zero.

The Central Bank of Sweden unexpectedly cut the rate by 0.25% to 1.75%, promising to keep it at this level “for a while” if there are no surprises from the economy and inflation. The Central Bank of Mexico cut its key rate by 0.25% to 7.50%, and promises to continue easing policy.

For the first time in 5 years, the Central Bank of Nigeria decided to reduce the base percentage by 0.5% to 27.0%.

The main conclusions. The global economic downturn continues. At the same time, the phenomenon of the 70s appeared – stagflation, a sign of a structural crisis. Note that if we count inflation according to the methods of the late 70s, then it will be under 10% (if not more) in both the EU and the USA. Well, the recession… if we consider inflation honestly, then, of course, it will also be greater.

As follows from an adequate theory, this decline will stop only after an equilibrium state is reached between household incomes and expenditures. And this will happen, according to the estimates of M.Khazina in the book “Memories of the Future”, when total expenses fall by about two times from the maximum. From which today’s economy has moved away quite slightly.

A very important point that we have repeatedly noted and described is the investment bias caused by the transfer of money from the real sector to the financial sector. And today we illustrate this process with Pavel Ryabov’s data.

“Every 5 years, the United States needs to increase its non-financial sector commitments more and more in order to maintain a relatively acceptable GDP growth rate.

From 1995 to 2000, the average annual increase in non-financial sector liabilities in bonds was 2.5% of U.S. GDP, with an average annual increase in real GDP of over 4%.

From 2003 to 2007, liabilities grew at a rate of 3.9% of GDP per year, and the economy grew by 3-3.1% per year in real terms.

From 2013 to 2019, the growth rate of liabilities increased to 5.9% per year, while GDP grew by an average of 2.6% per year.

From 2022 to 2Q25, the net accumulation of bond debt increased to 7.3%, with an average annual GDP growth rate of 2.1-2.2%.

The calculations exclude the crisis periods 2000-2002, 2008-2012 and 2020-2021.

It is clearly noticeable that after each crisis, the system becomes more and more voracious (from increasing debt) with less net positive effect on the economy.

At the same time, the government’s share in the growth structure of total non-financial debt is growing.

Currently, the net annual increase in bond liabilities (the credit market is not taken into account) for all issuers of the non-financial sector is 2 trillion, of which the federal government accounts for 1.6 trillion (it will be higher, since in 1H25 there were government debt limits), states and local governments about 0.13 trillion, and non-financial businesses only 0.23 A trillion.

The share of non–financial companies in the structure of total debt growth is only 11.8%, over the past three years – 10.2%, whereas in 2012-2019 it was almost 30%.

The government replaces private debt in the structure of accumulation of obligations and puts the economy on unlimited and conditionally free fiscal doping (interest expenses are financed by new debts, since now interest expenses account for half of the budget deficit).

Actually, one of the reasons for the decline in profitability of non–financial debt (more debt and less effect on the economy) is precisely the shift in structure in favor of the state, but on the other hand, entering the arena of the state is a consequence of the fact that the private sector is not pulling.

It’s one thing when the cost of raising debt is practically free, as in 2009-2020, but it’s another thing when the rates are record high (maximum in 25 years).

There is no prospect of reducing the cost of debt collection due to the creeping loss of confidence in the Fed and rising inflation expectations, nor is there any prospect of reducing dependence on debt. The system is firmly hooked on doping, which has become very expensive.”

It should be noted that this is nothing new for our readers, but the scale of the problems is significant in itself. Note, by the way, that the phrase “free attraction” seems, to put it mildly, controversial. Since the return on capital in the financial sector was much higher, those who attract money to the real sector actually refused to make a larger profit.

Autumn has almost fully entered into its own rights, September ends next week. And we wish our readers to get the most out of contemplating the gradually falling asleep nature (unless, of course, they live in the southern hemisphere!) and get as much rest as possible on the weekend. As the work weeks will become more and more difficult.